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The foreclosure process can take a while in most states. In Michigan, mortgage companies can’t even begin the foreclosure process until a borrower is at least 120 days past due on their payments. 

Even then, a sheriff’s sale can’t be held for at least four weeks after the foreclosure notice is posted on the home’s front door.

In other words, foreclosures don’t happen overnight, no matter what state you’re in. 

When a mortgage company intends to foreclose on a property, they need to make sure that their asset is protected in the meantime, and that the public also knows it’s happening. To do this, the lender will file either what’s known as a lis pendens or notice of default, depending on the type of foreclosure being pursued and what state you are in.

Here are some more details about what a lis pendens is and how it applies in foreclosures.

What Does Lis Pendens Mean in Foreclosure?

Lis pendens is a Latin phrase that essentially means “suit pending.” In this sense, it’s a public notice that lenders will initiate when they begin the foreclosure process.

The idea behind a lis pendens is to notify the public that there is a lawsuit pending on the property in question. It puts a mark on the property’s title so that it won’t be sold easily. 

By filing a lis pendens, a lender will be making it very difficult for the borrower to sell the home, since buyers typically aren’t interested in acquiring properties that have clouded or bad marks on the title.

Lis pendens are filed directly with the recorder’s office in the county in which the home is located, typically known as the register of deeds office. It’s a public record file that notifies anyone who wishes to research the title history and determine the condition of title on a property .

This type of document can actually be used in a number of situations in which there is a dispute on a property, including in divorces, when a will is being contested, when a contract is being disputed and when the homeowner hasn’t paid property taxes.

When is a Lis Pendens Filed in Foreclosures?

A lis pendens is typically filed in all judicial foreclosures. This type of process requires the lender to start the judicial foreclosure process by filing an official lawsuit with the county in which the property is located.  However, a lis pendens is not required to be filed when foreclosing by advertisement.

Along with the actual lawsuit, the lis pendens notice will be filed with the recorder’s office. The states that require lis pendens to be filed say that it must accompany the actual foreclosure complaint.

This is where a lis pendens in foreclosure differs from other disputes. In a divorce, for instance, a lis pendens is allowed to be filed on a property, but it’s not a requirement. 

Contained in a typical lis pendens is a full description of the property in question, as well as the described nature of the exact claim against it. 

In all, 22 states require judicial foreclosures and the lis pendens that go along with it. While Michigan does have judicial foreclosures, they are not very common. Instead, most foreclosures in the state of Michigan are non-judicial foreclosures by advertisement and require a notice with a slightly different name.

For non-judicial foreclosures, lenders have to record what’s known as a notice of default. This notice will take the place of a lis pendens, but serves a very similar purpose. It, too, is a notice that informs the public of pending action against a property, and it also has to be filed with the recorder’s office in the county in which the property is located.

Unlike a lis pendens, though, a notice of default will usually contain very specific information that outlines the details about the loan that’s in default.

Once the notice of default or lis pendens is filed, the property in question is considered to be in what’s called the pre-foreclosure phase. This phase will last until that property is finally sold.

Details of Lis Pendens and Foreclosure in Michigan

As mentioned before, a lis pendens or notice of default can’t be filed by the lender until the borrower is at least 120 days behind on their monthly mortgage payment. Up until that time, the lender is required to take certain steps to notify the borrower of the missed payment and options for making it right.

The first written notification of delinquency happens on Day 45 after the missed payment, at which time the lender has to assign the homeowner a single point of contact for the case, as well as their options for loss mitigation. 

Once Day 121 hits, the lender is free to file the lis pendens (in judicial foreclosures) or notice of default (in non-judicial foreclosures).

From that point, a Sheriff’s Sale will be held to sell the property to the highest bidder. However, this cannot occur until public notice of the upcoming Sheriff’s Sale has been advertised weekly for four weeks leading up to the date of the sale.

Even after the property is sold at Sheriff’s Sale, homeowners in Michigan enter what’s known as the redemption period, which commonly lasts six months. During this time, the homeowner can redeem the property by paying the entire foreclosure sale amount, by refinancing their mortgage, and selling their property on the fair market.

Know Your Rights in a Lis Pendens Foreclosure

Lis pendens sounds like a fancy legal term, but all it means, essentially, is that a suit is pending. In the case of a property foreclosure, it notifies the public that a lender has started foreclosure proceedings against a homeowner who is in default of payment.

If you are facing a lis pendens or notice of default foreclosure in Michigan, it’s important to know what your rights are. The simple filing of either of these notices doesn’t mean you have to give up your home. In fact, there’s still plenty you can do to resurrect the situation.

That’s why it’s important that you know your rights and the steps you need to take to protect yourself. At Babi Legal Group, we have been helping homeowners like you for over 15 years to solve real estate disputes such as foreclosures.

Contact us today to find out how we can help you.

When homeowners fail to meet the requirements of their mortgage, lenders will often proceed with a foreclosure to reclaim their property. This is done because the property itself is what’s used as the collateral to secure the loan.

Until the borrower pays the loan off, the collateral — the property in this case — remains an asset they can seek to recover to pay the outstanding balance owed. The lender then has the right to foreclose on the property when the borrower doesn’t pay the agreed-upon mortgage.

While there are different processes and requirements that are set by each individual state, the end goal of foreclosure is the same — to reclaim the unpaid balance owed through the collateralized property.

Despite a formal foreclosure process taking place, there are sometimes when the lender will need help to remove former owners from the property once a sheriff’s sale has gone through. This is done through what’s called a writ of assistance.

Let’s dive deeper into how this works.

The Foreclosure Process in Michigan

In Michigan, majority of mortgage payments are due on the first of the month, and are considered delinquent as of the second, unless a grace period is offered. Lenders are able to assess late charges for any late or missed payment, though they are required by state law to make a live contact with a borrower to discuss options they have for loss mitigation.

If the payment hasn’t been made by Day 45, the lender will assign a point of contact for the borrower and provide them with written delinquency notification as well as their options for loss mitigation.

In most instances, from this point until Day 121, borrowers are able to work with lenders directly on these options, which could include partial payments or a modification of the loan. 

The foreclosure process can start on Day 121 if the borrower hasn’t made the proper payment or come to an agreement with the lender. At this point, the lender will schedule a date for a sheriff’s sale, which must be published in a local newspaper four weeks in a row. The date of the sale will also be posted on the property itself two weeks after the first publication date.

The Redemption Period

Michigan foreclosures allow for what’s known as a Redemption period. This starts on the day of the sheriff’s sale and runs for six months after it, in most cases. The redemption period can last up to 12 months if the amount that’s outstanding on the mortgage is two-thirds of the total amount of the original loan or less.

The redemption period for farming property also can be as much as 12 months. 

During this period, the borrower is allowed to remain living in the property without having to make any payments. They should maintain the utilities and insurance on the property as well as be responsible for maintaining the quality and upkeep of the property.

The homeowner has to allow the person or entity who purchases the property at sheriff’s sale to inspect the property during this period.  Failure to allow the required inspection can result in a Court reducing the allowed redemption period.

They also have the opportunity to redeem the property by paying whatever amount is bid at sheriff’s sale, plus any fees and interest.

Evictions after the Redemption Period

Once the redemption period ends, the borrower must vacate the property. If they haven’t done so voluntarily by this period, the new owner will likely seek a summons for eviction, which would be held in the District Court the property is located in. 

If the purchaser at foreclosure is successful in the eviction they will receive an order for possession of the property, then the court will set a date at which the local sheriff to remove the borrower from the property if the borrower doesn’t voluntarily vacate on their own. This is done by an official document called a writ of assistance or an order of eviction.

What is a Writ of Assistance?

A writ of assistance is an official order issued by a court that directs one party to deliver or convey a property, and transfer a deed, right of ownership or document to another party. In the case of a foreclosure, the writ of assistance essentially serves as an official eviction from a property.

The writ of assistance will outline what the homeowner needs to do and by when. Usually, this will simply include a date by which they need to completely remove themselves and their possessions from the property.

The document will also include language that explains what will happen if this isn’t done voluntarily. In Michigan, this means that the local sheriff will show up to the property on the specified date and escort the person off the property and throw out all the personal property in dumpsters that are brought to the property on the day of the eviction.

The sheriff will essentially serve as the overseer, ensuring that the person vacates the property and removes their personal property, and that the locks are changed by a registered locksmith to ensure the new owner is the only one who can access it. 

Foreclosures in Rental Properties

When the property being foreclosed on is a rental with tenants on premises, the rules aren’t as straightforward. A writ of assistance can’t simply be issued once the redemption period ends.

How long tenants are able to remain in the rental property, and the other rights they have, depend on a number of factors, including when their lease was signed and how long it lasts for. Some tenants may even be able to make some money in return for vacating the property voluntarily, in what’s known as a cash-for-keys deal.

Know Your Rights in a Foreclosure

If you’re going through a foreclosure in Michigan, it’s very important to know what rights you have. Some lenders will try to force you out of a property — or take the property from you — before you legally have to leave. It’s also key to know when you will be able to reclaim the property through, and what you have to follow to do so.

If you are facing a writ of assistance in a foreclosure in Michigan, you want to work with an experienced law firm that can help guide you through the process. Babi Legal Group has been helping homeowners in these situations for many years now.

The attorneys at the practice have 20 years of combined experience in real estate, with more than 10 years of experience in business, criminal, debt collection and debt settlement law.

Contact us today for assistance if you’re facing a foreclosure in Michigan.

When someone purchases real or personal property, they typically will do so either in cash, on a credit card or as part of a larger loan such as a mortgage. If a secured loan is used to finance the purchase price, then the actual property itself is used as collateral.

The most common example of this is a mortgage on real estate or a secured loan on a vehicle. Most people don’t have the financial means to purchase a home outright in cash. So, they turn to financial institutions to get a mortgage. The financial institution that provides the loan to the homeowner lends them the money needed to complete the purchase, takes a security interest against the home, and the borrower must pay back the money on a monthly basis in return.

Sometimes, though, borrowers can’t qualify for a traditional mortgage, so they look for alternative funding sources. In these situations, the seller may put a vendor’s lien on the property to protect the asset. Yet, vendor’s liens can also be used in other circumstances that involve personal property.

Below is a full explanation of what a vendor’s lien is, and how it works in a few different applications.

What’s a Vendor Lien?

Vendor’s liens serve as a claim for the seller on some type of personal property. The lien is a legal document that will give the seller the ability to repossess the property in question if certain conditions are met.

In most cases, the seller would try to repossess the personal property if the buyer doesn’t make payments according to the agreed-upon terms. If the seller does repossess the property, they would have a right to either hold onto it or sell it to someone else.

What Can Be Secured Through a Vendor Lien?

A vendor lien can technically be placed onto any personal property that’s being paid for by a loan. This could apply to real estate, an appliance for your house or a vehicle.

Each state has its own rules and regulations for what types of property may be secure through a vendor lien. Most commonly, though, they are applied to real estate, jewelers, storage facilities, vehicle repair shops, and financial institutions or banks.

In all of these cases, if the borrower or customer fails to make payment on the money they owe, the person or entity that holds the vendor lien will be able to repossess the property.

So, for example, if you fail to pay a repair bill on your car and the auto mechanic has a vendor lien on your vehicle, they’d be able to at least attempt to take possession of your vehicle.

What is the Purpose of a Vendor Lien?

The obvious answer is that a vendor lien is a tool that lenders of any kind can use to take back property if payment for that property isn’t made by the borrower. So, in the above case with the auto mechanic, the shop would be able to use the vehicle itself as leverage to dissuade the owner of the vehicle from not paying the bill.

But, a vendor lien goes much deeper than that. It prevents the borrower from either transferring the title or selling that property until they are able to clear the title. In this case, the seller will be the rightful owner of the property in question up until the borrower pays off the property completely.

How a Vendor Lien Works for Real Estate

Not every homeowner is able to qualify for a mortgage. When this happens, they may not have a lot of options for obtaining the necessary financing to pay for the home.

In some cases, the seller of the home would be willing to be the lender. Instead of the buyer using money they got from a mortgage company to pay for the home, they would make monthly payments directly to the seller to satisfy the sales price.

A contract would be drawn up that lays out the terms of the sale — just like a mortgage. In that contract would typically be a vendor lien, which would protect the seller’s interest.

It could technically prevent the buyer from selling the home again to another person before they fully pay off the loan. There might be language in the vendor lien, though, they would say this would be OK as long as the holding of the vendor lien approved of the sale.

The vendor lien would serve as the official document in this out-of-the-ordinary home sale transaction, and it would allow the seller to begin the foreclosure process if the buyer doesn’t make the scheduled payments or falls behind. 

How a Vendor Lien Gets Discharged

After all payments are made in the contract, the borrower won’t owe any more money, and the vendor lien will be completely satisfied. Some contracts may include language that says the vendor lien will be automatically discharged when this happens.

Even so, it’s in the best interest of the borrower to get a signed, written document that serves as evidence that the borrower has satisfied the vendor lien and it’s paid off. That way, the holder of the vendor lien can’t make a claim to the property in the future.

This is very important to borrowers for another major reason — vendor liens will typically be reported on a borrower’s credit report. As such, the mere presence of a vendor lien could affect a borrower’s credit score for as long as it’s still on their record.

When the borrower is able to prove that they have satisfied the vendor lien and it gets discharged, it should be removed from their credit report as well, which will typically result in their credit score increasing.

Vendor liens can be rather complicated depending on the type of property you’re trying to secure. Since a vendor lien can be attached to a written contract agreed to by two private parties — and not a mortgage company, for instance — it’s important that if you’re entering into a contract that has one, you understand everything it means.

Cannabis has become big business in Michigan in a very short period of time. While the Michigan Regulation and Taxation of Marijuana Act was passed in 2018, the first sale of recreational marijuana didn’t take place in the state until December of 2019. 

In the first full year of recreational marijuana sale in 2020, overall sales totaled more than $950 million. One year later, that number exceeded $1 billion for 2021, the Marijuana Regulatory Agency reported.

It’s clear that cannabis has become big business in Michigan, and it’s expected to grow at considerable rates in coming years, too. This fact is attracting a lot of people to the industry who are looking to cash in on what is a completely new industry.

If you want to get in on the cannabis sales game, there are rules and regulations you must follow. Below, we’ll discuss cannabis license approval at both the state and municipality level.

Types of Licenses Available

Michigan state law provides for a few different licenses related to cannabis. So, the first step in getting license approval is to figure out which license you want to apply for. 

There are various six different categories of licenses to which you can apply. These include …

• Grower (Class A): The licensing fee of $1,2004,000 will allow businesses to grow as much as 5100 plants. They can be sold to processors or retail cannabis stores.
• Grower (Class B): The licensing fee of $6,000 will allow businesses to grow as much as 1,000 plants.
• Grower (Class C): The licensing fee of $24,000 will allow businesses to grow as much as 1,500 plants.
• Microbusiness: The licensing fee of $8,000 allows owners to grow as much as 150 plants, then process what they grow and finally sell it directly to legal adults. It’s a way to vertically integrate a cannabis business in Michigan.
• Consumption establishment: A licensing fee of $1,000 allows people to operate social clubs that welcome people to use marijuana while inside. In most cases, the clubs are restricted to people who are at least 21 years old, and the establishment typically can’t sell alcohol or food.
• Event organizer: A licensing fee of $1,000 allows organizers to hold temporary events revolved around marijuana. Some of these events have entrants who compete for various prizes, while others are conferences.
• Temporary event: For a fee, people who hold an event organizer license may hold an event that allows for the consumption and sale of cannabis products. Every day the event is held, the licensee must pay a $500 fee. If cannabis will be sold, then the fee goes up by another $500 per day, plus $500 for every person who’s authorized to sell there.
• Testing facility: The licensing fee of $25,000 allows for people to open cannabis testing facilities specifically for recreational usage.
• Marijuana Processor: The licensing fee of $24,000 will allow businesses to process marijuana into its various allowed bi-products such as an oil or edible.
• Marijuana Retailer: The licensing fee of $15,000 will allow businesses to sell all allowed marijuana products.
• Marijuana Secure Transporter: The licensing fee of $15,000 will allow the license holder to transport marijuana to other state approved businesses.

One thing to note is that Michigan changed its state law in regard to marijuana licensing. In early 2022, the state dropped a requirement that a licensee must first hold a medical marijuana license to apply for a recreational usage license. Now, prospective license holders can apply directly to receive a recreational license.

How to Get a Michigan State Cannabis License?

Applying for and receiving a Michigan state cannabis license is essentially a two-step process.

Step one is the pre-qualification process. A $6,000 fee must be paid to the State of Michigan Marijuana Regulatory Agency to start the process.

Pre-qualification involves submitting an application to Michigan’s Department of Licensing and Regulatory Affairs. Once that is done, officials from LARA will conduct a background check on all applicants for the license, including both the primary applicant and any supplemental applicant.

If you are approved in pre-qualification, you’ll be allowed to search for a facility where your business will operate. The facility must be fully secured before the second step can be started, which includes applying for the full state cannabis license.

During this step, MRA officials conduct an inspection of your facility. They’ll also examine local laws and regulations, your company’s financial statements and prospectus and information about your employees.

If all goes well, you’ll be approved for a Michigan state cannabis license. To formally get your license, you’ll have to pay the initial licensing fee, which will vary according to the type of cannabis business you’re opening. You also must pay a renewal fee each year to keep the license active.

How to Get a Municipality Cannabis License in Michigan?

Step two in the process of gaining approval for a Michigan state cannabis license is finding and securing a facility for your business. You won’t be able to just choose whatever facility is up for sale or rent, though.

Michigan’s cannabis law allows local municipalities to set their own rules in regard to businesses in the marijuana industry. Some municipalities only allow certain types of cannabis businesses — either medical or recreational, for instance. Others allow all types of cannabis businesses, while some don’t allow any at all.

Generally speaking, if a municipality has laws that allow recreational marijuana facilities to operate, they probably also allow medical marijuana facilities to operate there, too.

The same is not necessarily true the other way around. For example, Acme Township in Grand Traverse County allows for medical marijuana facilities but not recreational marijuana facilities. 

State Laws in Regard to Municipal Licenses

Michigan state law set the parameters for what municipalities were allowed to do in regard to providing for the operation of cannabis businesses within their borders.

First and foremost, the state put it in each municipality’s hands to decide whether they wanted to “opt in” to allowing processors, secure transporters, provisioning centers, growers and/or safety compliance centers to be located there. If a municipality decides to opt in, they must pass an ordinance that not only permits but regulates the facilities.

Municipalities do have some freedom in terms of what they can include in the ordinance, such as:

• Type: They can authorize multiple types of cannabis facilities or only one.
• Number: They can limit how many facilities can operate there, and how many of each specific type of facility.
• Fee: They can charge an additional $5,000 fee to every person receiving a cannabis license.
• Supplemental ordinances: They can enact additional ordinances that are related to the cannabis businesses, such as zoning regulations that prohibit facilities to be located within a certain distance from a school, for instance.

What municipalities don’t have the freedom to do is set regulations or rules regarding either the pricing or purity of the cannabis being processed/sold in their municipality. They also cannot implement laws and regulations that conflict or interfere with state-level regulations in regard to the licensing of cannabis facilities.

Each municipality may have their own unique application process for receiving a license. So, make sure you contact the local government of the municipality. in which you wish to operate a cannabis facility to get more information.

Cannabis-related businesses can be extremely lucrative, but they also bring with them a lot of challenges that businesses in other industries don’t face. Even though both recreational and medical cannabis is legal in Michigan and many other states, for example, setting up shop is not as easy as it is for other industries.

One of the biggest challenges for cannabis-related businesses is landing the necessary real estate to conduct their business. Some building owners simply don’t want to lease or sell to people who run cannabis businesses. Others require the business owners to take out certain insurance policies or pay additional fees and/or higher rents to operate there.

In addition, business owners in the field might have trouble securing a loan to purchase a property. That’s because marijuana is still considered illegal according to federal law, so many large financial institutions won’t lend to those who deal in marijuana — even if it’s legal where they operate. 

For a cannabis-related business to even receive a license to operate in Michigan, they have to get the proper approvals from both the state and the municipality where they want to operate, which can only be done once they have a property secured and there are different ways one may be able to secure a property.

With all this being said, here are some of the main real estate transaction options for cannabis-related businesses, as well as the pros and cons of each.

Property Purchase

A property purchase is the most common form of real estate transaction in the cannabis industry. This includes the company purchasing the facility that they will use to operate their business from a seller. 

There are many advantages to this type of real estate transaction. For one, the cannabis business will retain full rights to the property immediately. They won’t have to check with a landlord to see if it’s OK to operate their type of business, or meet any specific requirements the landlord has.

Second, the property can serve as a major asset for the business, especially after it’s paid off. In this same vein, the payments the business makes toward the purchase price of the property is a direct investment in a real asset, rather than just being dumped into rent.

Finally, purchasing the property provides the owner with potential tax benefits, such as being able to deduct any interest paid or depreciation. 

On the flip side, purchasing a property to operate a marijuana business can be quite expensive. Depending on the type of cannabis business you run, you might need a large warehouse, state of the art equipment and many personnel, which might be more than some people can afford.

Purchasing a property also adds a significant line item to the business’ long-term debt service. As mentioned before, it might also be difficult for cannabis business owners to obtain decent financing for the property, causing them to either seek out alternative funding sources that could come with high interest rates or have enough cash on hand to purchase the property outright.

Lastly, this type of real estate transaction might be limiting in the long run. If the company grows at a rapid pace and needs more space, for example, the business can’t simply finish out the lease and move to a new facility. They would be stuck with a building that they own and might have to sell or expand if able.

Land Agreement

Another option is a land contract agreement. A land contract is an agreement between a seller and a buyer in which the seller will essentially act as the mortgage company. The seller will hold onto the title of the property until the buyer completely pays it off. 

One of the biggest advantages to this type of real estate contract for cannabis-related businesses is that it opens up new possibilities for funding. They don’t have to worry about being rejected by major banks for loans or seek out expensive lending alternatives. 

A land contract  agreement will provide the business owner with the benefits of owning a property, as the payments they make each month will go toward paying off the land contract balance while building equity in an asset. 

The downside to a land agreement is that the seller will hold onto the title for the entire time until the buyer is able to pay off the total balance so the title can be transferred to the buyer.

Another big negative is that these contracts are usually much more stringent than typical mortgages. For example, the buyer may have no leeway at all in repayment terms. If they miss even a single payment, then the seller might have the ability to forfeit the land contract and recover the property from them. This doesn’t provide a lot of protection to the cannabis business owner, should they not have a solid relationship with the seller.

Lease

If property ownership is not in the cards — or is not something you desire — then you could of course opt for leasing your commercial space. This would work just like the lease of any other property. You would come to an agreement with a landlord on the terms of the lease — the length, the restrictions, who is responsible for what, etc. — and then pay an agreed-upon price to rent the space.

There are many advantages to a lease for cannabis-related businesses. First, it doesn’t tie up a lot of cash in an asset that is outside the core business. Instead of being land owners, the business can focus instead on just running the business.

Second, leases provide more flexibility. If the business needs to expand, move or add space elsewhere, the lease likely won’t stand in the way of it doing so. 

Third, most leases will provide coverage for ongoing maintenance. Sometimes, this will cover not only the exterior of the property and building but the interior as well. 

Lastly, leases allow cannabis business owners to not have to worry about securing financing. They can simply use cash-on-hand to pay their monthly rent, instead of trying to secure financing for a large purchase.

The biggest downside to a lease is the business owner doesn’t have any control over the property. They are at the mercy of the property owner in many respects. Rental increases could become prohibitive, and the potential for this to happen provides cost uncertainty.

The property owner may decide to sell at one point, and if the new owner doesn’t want a cannabis-related business to operate there, they may not renew the lease and eventually kick you out.

Finally, cannabis-related businesses might have a tough time finding available property owners who would be willing to lease them a building. As mentioned before, even though both medical and recreational marijuana are legal in Michigan, not everyone wants to be directly, or even indirectly, involved in the industry.